The government’s failure to obtain the second tranche of IMF support is a wakeup call regarding the precarious condition of the economy. The IMF has said that Sri Lanka’s economic recovery is still not assured. It has also said that the government has not met the economic targets set for it, particularly with regard to reducing the budget deficit due to a potential shortfall in government revenue generation. The IMF’s refusal to grant the second tranche of USD 330 million at this time will erode the confidence of prospective investors in the economy. The IMF has said the second tranche under its lending programme would only be released after it reaches a staff-level agreement, and there was no fixed timeline on when that would take place.